What’s Hot? The Lakewood Balmoral Historic District: 5255 N. Lakewood in Andersonville
This 4-bedroom vintage home at 5255 N. Lakewood in the Lakewood Balmoral Historic District in Andersonville recently came on the market for the first time in 14 years.
I’ve been told it went under contract within days and rumors are swirling there were multiple offers.
Built in 1910, the arts and crafts home is on a 50×123 corner lot.
It has space pac cooling and a 2 car garage.
Most of its vintage features are still intact including incredible woodwork, beamed ceilings, built-ins in the dining room, stained glass and a claw foot tub.
All 4 bedrooms are on the second floor.
It also has a separate in-law unit on the bottom floor with its own entrance.
Is Lakewood Balmoral the hottest neighborhood in the city?
Pamela Ball at Baird & Warner has the listing. See the pictures here.
5255 N. Lakewood: 4 bedrooms, 3 baths, 2 car garage, 4832 square feet
- Sold in April 1996 for $445,000
- Currently listed for $995,000
- Under contract within days
- Taxes of $3997
- Space pac cooling
- Bedroom #1: 23×15 (also has a sunroom)
- Bedroom #2: 13×12
- Bedroom #3: 14×13
- Bedroom #4: 12×10
Here’s a working link to the photos: http://tours7.vht.com/Viewer/PhotoGallery.aspx?ListingID=50050779&Style=IDX
Wow…as an old house lover I must say that this house is stunning. The taxes are shockingly low.
I know nobody wants to hear it, but: compared to home prices/values in L.A., Chicago real estate is EXTREMELY cheap. A week ago, I would have looked at this featured property and thought “wow, that is a really high price for a place like that”. Now, after looking at real estate in L.A., I feel that the person who bought this got a ridiculously great deal. Seriously, if you want to feel better about chicago real estate, look at L.A. !!!!
After owning the same home for 14 years one would hope that at least a portion of the mortgage would be repaid, but no, they managed to borrow $300,000 above and beyond their original mortgage! They even have judgments recorded against the property!
Now they manage to sell for nearly twice the original asking price. Talk about getting lucky – this is an inflationary and gentrification bailout.
This is every homeowner’s dream come true! Buy – hold – spend – borrow – PROFIT!!!
“After owning the same home for 14 years one would hope that at least a portion of the mortgage would be repaid, but no, they managed to borrow $300,000 above and beyond their original mortgage! They even have judgments recorded against the property!”
Looks really nice though.
clio, if you’re going to do shtick, you could put a little more effort into it.
“I know nobody wants to hear it, but:”
I stopped at the but
There are a variety of reasons for crazy LA RE prices including prop 13; non-recourse 1st mortgages (non-refi’s); limited housing stock in desirable areas (who wants to commute to LA from Palmdale?); limited building range(surrounded by ocean, desert, mountains); and of course FHA borrowing limits up to $729,000 with only 3.5% down.
Don’t forget that most of the toxic subprime mortgage breweries originated in CA (countrywide, indymac, golden west) and they started brewing locally;
and of course, 60% of all option arm (pick-a-payment mortgages) are in CA. And many of them have yet to reset or recast but will do so in the upcoming 24 months.
CA will eventually tumble. Even the westside is poised to take a big hit.
“clio on October 1st, 2010 at 1:32 pm
I know nobody wants to hear it, but: compared to home prices/values in L.A., Chicago real estate is EXTREMELY cheap. A week ago, I would have looked at this featured property and thought “wow, that is a really high price for a place like that”. Now, after looking at real estate in L.A., I feel that the person who bought this got a ridiculously great deal. Seriously, if you want to feel better about chicago real estate, look at L.A. !!!!”
sorry, original PURCHASE price, not original asking price…huge difference!
Oh. My. God. I love this interior and the location. I wish the buyer was me. What would the taxes adjust to on this property? Any ideas?
tremendous. oh and Clio seeing as how we’re not buying prop in LA the prices there relative to here is irrelevant.
Indeed it’s irrelevant.
Such me moving to Metro Dayton, OH and being similarly shocked by what you guiys would be able to get here on the same income. But I know the commute to Chicagoland and back would be hell.
“Seriously, if you want to feel better about chicago real estate, look at L.A. !!!!”
And if you want to feel worse about Chicago RE look at Bismarck ND. Equally relevant.
Dear lord this is gorgeous.
“What would the taxes adjust to on this property? Any ideas?”
The 08 taxes were based on an AV of ~30,000; the ’09 taxes will be based on an AV of ~40,000; and the ’10 taxes first pass AV is ~50,000. So, even if EqF * rate were to stay the same (they won’t) taxes payable next year would be closing in on $7k. If the estimates we were playing with yesterday play out, this year taxes will be almost $6k.
And the phaseout shouldn’t stop until the AV gets to ~80,000, which would mean, at last years rates, taxes of over $10k.
I was out walking the day of the open house. I drooled. The Realtor had all the old records for the property. It has the original (non-working) fridge in that wall of cupboards. The basement could be rented out or used for a family member. This is my dream house.
cool place. but what is going on in that family room pic. there is a table that is either a very weird size or has been shrunken by the trick photography.
http://tours7.vht.com/BWI/T50050779/still/viewer_156.jpg
i guess it could be a coffee table
Lakewood/Balmoral and up in Andersonville has always been hot. I’m glad it is somewhat an overlooked neighborhood by the Chads & Trixies.
One of the only areas I would even consider buying a house in the city if I were to move back.
I think Clio is right. Chicago is a bargain compared to other major cities of the same caliber. Not saying there still isn’t some room for prices to fall, but compared to LA, Boston, SF, NYC, DC, etc Chicago is a steal from a cost of living standpoint.
So beautiful. But even with the kitchen island, it seems like very little counter space to work with when cooking.
It was a coffee table and weirdly out of place in this mostly empty house.
That space is between the upstairs bedrooms. I guess it could be called a family room, but it seemed more landingish to me.
“Cool place. but what is going on in that family room pic. there is a table that is either a very weird size or has been shrunken by the trick photography.”
I don’t get the “LA is more expensive” argument. So what? That analysis might help people choosing between cities for relocation and investment purposes. But for us working folk looking for a home, how does that factor in exactly? To me, it doesn’t. Unless I’m planning on moving away from Chicago, I really don’t care what RE prices in LA, NYC, London or Milan are. Interesting trivia I suppose…
Gorgeous. I’m incredibly jealous of the buyers.
brilliant place,
would love to come home and walk through the front door of this house every day.
I thank the previous owners debt taken out to create a wonderful home that anyone would be proud of.
“I don’t get the “LA is more expensive” argument. So what? That analysis might help people choosing between cities for relocation and investment purposes. But for us working folk looking for a home, how does that factor in exactly? To me, it doesn’t. Unless I’m planning on moving away from Chicago, I really don’t care what RE prices in LA, NYC, London or Milan are. Interesting trivia I suppose…”
The point is that if you judge affordability as a function of incomes, then Chicago is more affordable than most major cities. This means that if you are hoping for Chicago prices to keep falling, falling, falling to some imaginary level of affordability, then you may never get your wish. It may already be as “affordable” as major city can be.
I used to beat this drum — that Chicago is the best deal for what you can make v. what you can buy — and few people on this site ever get it.
So I’ll beat a different drum today: housing is affordable. We just spend too much money on other crap. Things that are now taken for granted that used to be a luxury: car, cable, cell phone, etc. Put that portion of your income to your housing and the picture starts to look a lot different.
As for this house: big, beautiful, in a great neighborhood. Lucky buyer. Interesting to see so much on the high end moving in this hood in the last year.
Clio–you’ve argued on many occasions that the last sale price of a home is irrelevant. Not to join the bandwagon, but isn’t last sale price of a home far more relevant when determining value than Chicago prices in relation to LA prices?
It’s not just Lakewood Balmoral that’s hot…I’ve noticed that reasonably priced single family homes and multi-units sell quickly anywhere in the Andersonville neighborhood. I don’t track condos in the area as much, so can’t speak on that.
My comments about L.A. real estate were merely posted to provide some perspective on home prices. I was hoping to provide some mental/emotional comfort to those in chicago who think that home prices are way too high and may be too scared to jump into the real estate market. My opinion is that if you can afford to buy, and want/need to buy – go ahead. Prices are NOT going to come down very much and we are bouncing around the bottom now. True there may be a good/great foreclosure/deal that pops up here and there but the chances that that particular property satisfies all of your needs is small. Also, the chance that you will be able to buy that particular property is even smaller.
Also, when I posted about Beverly Hills, Bel Air, West Hollywood, and Brentwood, another indirect message was that locaton is key. If you find something in a great location, the price is not going to go down that much. Buy now, be confident and don’t look back!!!
I love love love this neighborhood! Close to the lake, cute Andersonville shops and restaurants, very walkable… I don’t know about schools though. LSD is an easy commute or the red line. Perfect! I noticed this beautiful one about a month ago but missed the open house (which is fine since we can’t afford it:) http://www.redfin.com/IL/Chicago/5210-N-Magnolia-Ave-60640/home/12570921
This beauty (1450 W Summerdale) we talked about a few weeks ago also went under contract recently:
http://www.redfin.com/IL/Chicago/1450-W-Summerdale-Ave-60640/home/13402195
Ok house, the stucco exterior doesn’t inspire, kitchen has nice original features that are combined with new cabinets and a odd cabinet over the range, some wood work is refinished, while some is not, the proportions of the house or rooms do not sing, but the landscaping seems above average and expensive.
“Prices are NOT going to come down very much and we are bouncing around the bottom now.”
Ha! ha! Clio. I love it when you post. This couldn’t be farther from the truth. All I’m seeing is short sales increasing, sales declining and inventories rising (and it will get really bad in the spring.) Too many people are underwater and can’t sell without a short sale.
And you’re right about location, location, location. But that hasn’t saved owners in LP or Lakeview from selling for a 15% to 20% loss (and in some cases- more.) The owners in Andersonville appear to be better off than those in a more “prime” location (depending on how you define these things.)
I understand what you are saying Sabrina – but all of that has passed. Now prices are very low, interest rates are historic lows – it is like we reset the clock. Yeah, many people are screwed – but for the people who want to buy, NOW IS THE TIME!!! Pick a good location and buy buy buy!!! Even if you have to take a loss on what you have right now, trade up to a better location and you may find yourself in a better situation in 10 years. As an example, I had a friend who was priced out of Hinsdale in the mid 2000s so he bought a house in Downers. Now, he can afford to buy in Hinsdale (because the prices have come down) but he is scared to sell his house in Downers because he is going to have to take a 150-200k loss. I told him that the losses are even because he will be getting 150-200k off the house he buys in Hinsdale and in 10 years he will realize it was a better financial decision!!! OK off to Bar Marmont – L.A. is AWESOME!!!!
2008 taxes on 5210 N. Magnolia (mentioned above) were $10,200… so no question taxes on this place will be over $10K for the new owner.
Wow, I love the reno job on this house, especially the period appropriate light fixtures (look like they’re from Rejuvenation.) I think they left the table because it’s an antique, and to warm the space up a bit (same reason there are towels in the bathroom.) This is an example of good staging for an unoccupied house. If a place is completely empty it can feel cold and unwelcoming. I love the bathrooms, and suspect that the person who bought this place isn’t lookig for granite counters, white or maple cabinets, and stainless steel.
Lakewood Balmoral is not an officially designated historic district.
Lucky for them.
“Lakewood Balmoral is not an officially designated historic district.”
You are right Dal. Thanks for pointing that out. There are very few officially designated city “landmark” districts.
Pullman, on the south side, by the way, is one of the few historic districts in the country that has city, state and national historic designations.
Interesting how Pullman is being touted as a local historic district and unique residential neighborhood, while its role in local history as the site of one of the most important labor rebellions is underplayed.
“Interesting how Pullman is being touted as a local historic district and unique residential neighborhood, while its role in local history as the site of one of the most important labor rebellions is underplayed.”
It’s not underplayed if you’ve ever visited the neighborhood. It IS history (as many of the original buildings still remain.)
Why do you think it has the national historic designation? It’s not like they give that out to just any neighborhood.
Isn’t a stretch of N. Bissel a designated historic district? We were seriously considering 2130 N. Bissel (YES on the tracks and yes despite what you all said! It’s pending now after dropping $170K) and the realtor/owner was saying that it qualified for a one time tax deduction of $70K if you filed all the paperwork, which may be a pain she said-as not everyone on the block had done it-but worth it.
“Isn’t a stretch of N. Bissel a designated historic district? We were seriously considering 2130 N. Bissel (YES on the tracks and yes despite what you all said! It’s pending now after dropping $170K) and the realtor/owner was saying that it qualified for a one time tax deduction of $70K if you filed all the paperwork, which may be a pain she said-as not everyone on the block had done it-but worth it.”
The landmark district website isn’t working at the moment- but I don’t recall that the Bissell rowhomes actually had landmark status. “historic” status is a different designation.
Also- getting the historic tax freeze for a property is different than the official designations. Perhaps someone else who knows more about this area can chime in.
By the way- I always wondered who was crazy enough to buy those houses right on the red/brown line (which is running continuously on that stretch.) Now I know. 🙂
As others have already stated, this is a beautiful and meticulously maintained/restored home. The buyer is one hell of a lucky person.\
The home I am currently renovating in Denver is very similar to this one and luckily for me, it still has most of the original period fixtures, nail hole free walls and wordwork and the original cabinets & built-ins. It is great to see that some people realize the value of retaining a home’s original design and do not go the SS / granite route with period homes. As someone who tours at least 15-20 homes a week, it is VERY rare to see something like this without an astronomical price tag.
I do understand why clio brought up the LA RE market as I do the samme thing in comparing NYC, Miami and now Denver to Chicago. I do this for my own ‘amusement’ and nothing more. It is useless to think that the pricing diffence between totally different areas of the country would have any relevance to a buyer in the Chicago market now. His defense was to bring a bit of mental or emotional comfort to those in the midst of losing their asses right now. Nothing can be said that will serve to minimize those feelings of despair and hopelessness.
Regarding the statement that ‘NOW IS THE TIME TO BUY’, this is not at all the case and couldn’t be further from the truth. The wave of foreclosures and short sales has only started with tens of thousands more coming down the pike.
A relative of one of my crew owned homes in both Philly’s City Center and an upper level development in Orlando. They stopped paying their mortgage payments a little over 1 1/2 years ago when they realized their home values were now crap. Only in the past month did the banks finally take possession of both of them. One was a rental where the tenant found out about their financial status and had refused to pay rent for 9 months and the other was their own residence. Now after being basically mortgage free for all this time, they are frantically looking for any rental that will accept them. With those unpaid mortgages on their record, no one is willing to take the chance of renting to them.
While it seems like a good idea to ‘screw the banks’ and refuse to pay your debts because you are underwater, that idea turns into a major black mark on your credit record and makes it impossible to even find a lower level rental apartment.
So no clio, this is not the time to buy. I would advise anyone in the process now to proceed with caution as the home you think is a great deal now will be seriously overpriced in another year. From a serious and long term investor, even I am very reluctant to purchase any more foreclosed or short sale properties. Not only am I very concerned with the lack of maintance and vandalism done by the delinquent owners, I also know the pricing will continue to come down.
Other than new construction, already in distress units in high rise towers in So Florida, I am not buying anything right now. If an experienced RE investor like myself is not moving towards all these new ‘deals’ on the market, why would anyone else think this is the time to buy?
And before you accuse me of bashing you, let me assure you it is not a personal thing, I am only disagreeing with your claims.
sorry westloopelo,
i stopped reading at “As others have already stated,”
“i stopped reading at “As others have already stated,””
^^me too
westloop,
I respectfully disagree w/ u in regards to buying real estate now. If you find a house/condo w/ good bones that is a good deal in a GREAT area/building now ABSOLUTELY POSITIVELY is the time to buy. The prices in these GREAT, long standing desireable areas will NOT GO DOWN – and if you miss this chance, you may NEVER have the opportunity to buy in these buildings/area again. I am not talking about generic areas in Lincoln Park/Old Town/Lakeview – I am talking about more specific areas/buildings (think Palmolive/park hyatt/olympia centre/trump, ELSD, and the most desireable areas in the suburbs – Kenilworth, Winnetka, Hinsdale, OB, etc.). When I was in L.A. looking at real estate in Beverl Hills/Hollywood Hills and I asked the agents why the prices were still so high, they looked at me as if I had 10 heads. Basically, those areas are ALWAYS going to be the most sought after and will ALWAYS hold their value. So, I guess I am saying that IF you want/need to live in these super exclusive areas, now IS the time to buy otherwise you WILL be priced out forever!!
sorry Clio,
i stopped reading at “Clio on October 4th, 2010 at 8:25 am”
groove – no problem, I understand. If you selectively choose to read only the statements which support your opinion/lifestyle/choices, you will feel better. Nothing wrong w/ that.
“groove – no problem, I understand. If you selectively choose to read only the statements which support your opinion/lifestyle/choices, you will feel better. Nothing wrong w/ that.”
He just doesn’t like you, clio. Which I’m sure you also understand.
Groove reads plenty that he disagrees with–note his recent, extreme, disgust with ELP, but he’s not going to stop reading the folks who *love* ELP (except maybe Heitman, if he ever returns).
“except maybe Heitman, if he ever returns”
he is truly missed, not as much as G but missed, i loved that heitman so optimistic.
Groove, you want optimism: Pending home sales rise 4.3 percent in August – Yahoo! Finance
“Groove, you want optimism: Pending home sales rise 4.3 percent in August – Yahoo! Finance”
i need the ying to HD’s yang. so you need to match the level of HD’s debbie downer life is over the sky is falling swallow a colt 45 (or when in evanston a pipe bomb).
“Pending home sales rise 4.3 percent in August”
versus??
“versus??”
“Buy now or risk being priced out forever!”
““Buy now or risk being priced out forever!”
I know that you are being sarcastic and using this as a “joke statement” but it is ABSOLUTELY 100% true in some areas/cases. You won’t be laughing in 5 years when you ARE priced out of some neighborhoods/buildings. Then what are you going to do? – wait another 25 years for a housing slump. No, my friends, NOW IS the time to buy otherwise you WILL risk being priced out forever (also, don’t forget historically low interest rates – remember the interest rates of 16-17% in the early 80s?)
clio – Can I wait a year? I’d like to save a little more for the down payment.
I am curious as to what you think is going to change in 5 years that will cause real estate prices to rise drastically?
“You won’t be laughing in 5 years when you ARE priced out of some neighborhoods/buildings”
no wicker! you must do it now, suzanne/clio researched it
http://www.youtube.com/watch?v=Ubsd-tWYmZw
wicker,
I truly believe the best time to buy is going to be this fall/winter. We don’t know what prices/interest rates and other factors are going to be like for the spring market, but the people “in the know” predict that we are bouncing around the bottom right now – so if you find a place that is a great deal in the ideal area you would like to live, there will be little downside to buy it now (however, don’t panic and compromise just yet – if you don’t find something you really like, I am sure that you will be able to find something in the next year or two – especially if you are not looking for bargains in the most exclusive areas of the city).
While we will no doubt see further price declines overall and certainly major declines in marginal areas, how much lower will prices fall on nice places in nice areas (and by “nice” areas I do not mean the entire green zone)?
The ELP 2/2 I’ve been renting for over two years now, if sold today, would probably sell for no more than $425k (it was purchased three years ago for around $450k). In a year from now, while I don’t see it going for $450k+, I also don’t see it going for less than $425k.
“I am curious as to what you think is going to change in 5 years that will cause real estate prices to rise drastically?”
The economy will be a LOT better in 5 years. When people feel better about the economy, they WILL start buying. Right now there is a backlog of buyers who are not buying for many reasons. Add that to a growing population and a relative halt on new construction, and you WILL have the driving force needed to drive up real estate prices (maybe not to the levels of 2005-2006) but definitely more than today!!
“The ELP 2/2 I’ve been renting for over two years now, if sold today, would probably sell for no more than $425k”
Remind us of the rent, approx Assessments and Taxes and we can construct a reasonable “worst case” (non-collapse-of-USD version) valuation.
I bet it’s lower than you think, even tho the monthly cost would be similar.
Like G said volume will rise as prices fall. And it is all happening right on schedule and according to the script, like a grand econonic theatre….cue price declines, exit stage left….
“You won’t be laughing in 5 years when you ARE priced out of some neighborhoods/buildings. ”
In five years time I stretch my leverage and savings and buy what would’ve been an 800k property in 2005 for 525k.
😮
You’ll be invited to the housewarming clio so long as you don’t act obnoxious.
“drive up real estate prices (maybe not to the levels of 2005-2006)”
In real $$ terms, we won’t live to see the levels of 05-06. When you say “maybe” to something like that, it makes it easier to doubt your connection to reality.
“You’ll be invited to the housewarming clio so long as you don’t act obnoxious.”
Haha. backhanded non-invitation.
anonny,
I totally agree w/you -and you said it better than I did: while prices may bounce around the bottom (and may even dip) in many areas, we are not going to see much lower prices in really nice areas. In fact, they are the places to watch – once these places start selling and prices start increasing in these area, it is a sign that the market is turning around. I think that we are VERY close (if not already in) that time period.
“Remind us of the rent, approx Assessments and Taxes and we can construct a reasonable “worst case” (non-collapse-of-USD version) valuation.
I bet it’s lower than you think, even tho the monthly cost would be similar.”
Approx. assessemnts of $800/mo and taxes of $500/mo. Rent: $2,500/mo.
ok someone show me proof of the fed mr ben “oh shyte what do i do now” bernake uping the rate before fall 2011 and even then what .50 tops.
and even if RE rebounds a 1% appreciation a year wont price you out and lets say the price drop falls and spikes a tad by next spring summer. our wonderful banks will the jump at that chance and watch all the “shadow” inventory get dumped. then when that happens to prices? supply demand thing people.
but i will say this, the right time to buy is……you find a HOUSE you love and can easily afford it, that is the right time you beeaytches.
“When people feel better about the economy, they WILL start buying”
dooode when people have JOBS then they will be able to get above water, then after that they will buy.
“In real $$ terms, we won’t live to see the levels of 05-06”
Unless you have a terminal illness or are close to death, will will see these levels within a few years. Again, I am not talking about far out areas that were overbuilt (or even certain pockets in the green zone), but am talking about the most desireable areas/buildings. We are aleady seeing a LOT of increased activity in OB/Hinsdale and prices ARE rebounding.
“dooode when people have JOBS then they will be able to get above water, then after that they will buy.”
True – so what you have to do is make these houses affordable. Private loans/mortgages are just one way to do this. I have mentioned before that there are groups organizing to buy these foreclosures, make minor fixes, and turn around and offer 100% owner financing at 5-6%. Believe me, there are MANY people out there who, when you dumb it down, make it simple, and creative (tailored to their financial situation) they will buy. If the government and mortgage companies are too stupid to get their heads out of their asses, they are going to lose out – there are MUCH smarter people out there who are already finding ways to make money from this real estate slump.
“Approx. assessemnts of $800/mo and taxes of $500/mo. Rent: $2,500/mo.”
So, cash flow is ~$1200; $14,400/year. With risks of vacancy, maintenance, etc. I’d want an investment cap rate of 7.5%, which makes it “worth” $192,000 to me as a landlord. Even at 5% cap (ballpark for a semi-conservative rent-saver o/o buyer), it’s only worth $288,000.
That $425k is a 3.4% cap, which is the approx after-tax cost of a fixed-rate mortgage–in other words, it’s the *maximum* value–excluding any speculative capital value–of the place unless something (other than an increase in assessments or taxes) happens to drive up the rental value in real dollar terms.
“Unless you have a terminal illness or are close to death, will will see these levels within a few years.”
You don’t know what “real $$ terms” means, do you?
“including prop 13”
Ah prop 13. The owner-occupied equivalent of rent control.
“So, cash flow is ~$1200; $14,400/year. With risks of vacancy, maintenance, etc. I’d want an investment cap rate of 7.5%, which makes it “worth” $192,000 to me as a landlord. Even at 5% cap (ballpark for a semi-conservative rent-saver o/o buyer), it’s only worth $288,000”
uhhh – most buyers are not investors. You are correct in your analysis if we were talking about commercial property – but there is added monetary worth to ANY place because each place has varying degrees of value added (depending on location/desireability) because it serves another EXTREMELY important purpose (your living situation).
“Private loans/mortgages are just one way to do this”
yes but the common man, shoot even the common RE agent know very little in this realm.
i know i for one cant tell you of the top of my head the pitfalls or positives of this way of doing it. and know of no one that has gone this route, it seems rare and wonder what the reason is.
re: private mortgages: “it seems rare and wonder what the reason is”.
It IS rare but will become more common – most people are followers (which is ok – because there is little risk to them) but there are many entrepeneurs who are adventurous and these are the folk who are starting these groups. Remember, the computer, facebook, internet were all “laughed at” and thought to be implausible idiotic ideas that turned out quite well for those who perservered, saw a niche/need and took action.
“uhhh – most buyers are not investors. You are correct in your analysis if we were talking about commercial property – but there is added monetary worth to ANY place because each place has varying degrees of value added (depending on location/desireability) because it serves another EXTREMELY important purpose (your living situation).”
So, you have no rebuttal to the “$425 value = *max* pricing as a rental-cost equivalent”? And, recall, it’s a 2/2 condo, with $800/month assessments, so it’s not likely to be a long term solution for most buyers.
“So, you have no rebuttal to the “$425 value = *max* pricing as a rental-cost equivalent”? ”
Actually, that WAS my rebuttal – the rental value may be lower than the true value – but that just means that an investor won’t buy it. You don’t price real estate based on what rent it will get. If you did that, you wouldn’t have any of the million+ dollar houses/condos out there. Real estate also serves another person – it is your own personal living space, helps you express who you are, and adds comfort/peace to your live. These later intangible are what contribute more to pricing than a simple rent analysis.
“the rental value may be lower than the true value – but that just means that an investor won’t buy it”
Um, you’re borderline innumerate, along with being reading comp challenged, aren’t you? I’m saying that the $425k current value (per anonny) is over 2x investor value and is the max amount a rent-saver o/o would pay. And this was in the context of showing why/how it could decrease in sale price below the $425k current value–b/c, at $425k, it’s already absolutely topped out as a rent-saver, with no accommodation for increased taxes or assessments or any maintenance (or depreciation, just for JMM) costs, or transaction costs. And, when mortgage rates rise, the value as a rent-saver will go down.
Remember, we are talking about a 2/2 apartment which is readily substituted, not a 5/8.2 manse.
anon- I think we are going around in circles here. My point was that we don’t know the exact location/building it is in. This could add TREMENDOUS value to the condo. I agree w/ your rent analysis, but the value/price is NOT based 100% on whether it can be rented, etc. (also, if you do the math, if the person renting the place out paid 450k cash, he is still making a 2.5% return on his money – not great or even good, but still better than a savings account – again, I am not saying that this would be a great investor unit, but we really can’t argue prices until we know the building/condition and exact location.
As an example, let’s say that the unit was in the Palmolive – would you still say that 425k was too high? Ridiculous – people would pay 800k+ for that unit in the palmolive (even if you doubled the assessments and taxes).
“As an example, let’s say that the unit was in the Palmolive – would you still say that 425k was too high? Ridiculous – people would pay 800k+ for that unit in the palmolive (even if you doubled the assessments and taxes).”
I am assuming that annony (1) knows the current market value of the unit quite accurately, and (2) is paying market rent for the place. And I am trying to point out that it is completely reasonable to believe that there is downside risk in the value of the unit.
You, instead, are playing around with fantastical assumptions. Why not just speculate that the unit has a magical closet that opens onto mysterious doors in Midtown Manhattan, Belgravia, the 4th A., and Central. That would make the apartment worth *millions*!
No anon, I think we are beating a dead horse here. The value of the unit (even to Anonny) may not be the true value of the condo. Good buildings in good locations will do just fine as long as the owners are able to afford the payments/ rent it out. If anonny likes this location/unit, he would be smart to look for good values/buys in the building NOW – before prices start going up. Alternatively, he could contact the owner to see if the owner will sell the unit to him.
Also, don’t forget that many investor owners don’t have mortgages on their units – this makes it a LOT easier to hold on until the market rises.
a dead horse named clio?
“this makes it a LOT easier to hold on until the market rises”
But you’re trying to tell us it’s going to rise in a meaningful way in the next 12 months and be *significantly* higher–in real $$ terms, which is the only thing that really matters–within 5. So there’s nothing to hold on for, except greater IRR.
“a dead horse named clio?”
I know – I’m an idiot to keep trying to explain my point to people who obviously don’t want to hear anyone else’s perspective on the market. That’s fine – but don’t you dare complain about why others out there have money and can afford nice places – those are the risk takers and people who think out of the box . Others are followers who will NEVER accumulate the type of wealth they want.
“I’m an idiot to keep trying to explain my point to people who obviously don’t want to hear anyone else’s perspective on the market.”
Whatever, man. If you want to simply insult the few people who actually engage you on the basis of you not actually paying attention to the background of a comment, while also claiming that you like to be challenged, it’s not a wonder that you’re off-putting in person.
Also, you still haven’t answered whether you see future price levels at 05/06 peaks in real dollar terms. And then the obvious follow-up of why?
“Others are followers who will NEVER accumulate the type of wealth they want.”
You don’t accumulate a bunch of wealth by overpaying for your housing, f-tard.
“people who obviously don’t want to hear anyone else’s perspective on the market.”
I dont know clio, this kind of describes you today. tfo is laying down a pretty well supported, logical argument and you are covering your ears and spitting out some nonsensical replies.
“Also, you still haven’t answered whether you see future price levels at 05/06 peaks in real dollar terms. And then the obvious follow-up of why?”
Actually, in certain cases, present and future prices are ABOVE the 05/06 levels in terms of “real dollars”. When I look at the price of my house, it may have decreased 10% in value in 09 but is near 05/06 levels right now – and, given the deflationary period we are in right now, the price level is higher in “real dollars”. I know that I may be a small subset of the real estate population – just pointing out that the sky isn’t falling on everyone. And I am not saying this to irritate or belittle or rub it in – only to point out that real estate may still be an excellent investment. Open your eyes and minds – there is a LOT of money to make in real estate right now. Be smart, buy a house/condo w/ good bones in a great area and you may be surprised that
“tfo is laying down a pretty well supported, logical argument and you are covering your ears and spitting out some nonsensical replies.”
OK – wait a minute. All I am saying is that there is a HUGE emotional/psychological component to buying real estate that goes WAY beyond simple financial calculations. For example, Groove (? this thread or another) today said that he would pass up any house that has wood paneling in the basement – regardless of the price. someone else humorously stated that he could make money off of groove by buying the house, ripping out the panelling and selling it back to groove for a large profit to which groove agreed. Obviously, they are joking around – but there is truth in these statements/sentiments. Don’t underestimate the psychological factor. The ONLY reason the house I live in is actually at 05/06 prices is because of the psychological factors (people imagining a great “estate type” lifestyle, etc.). That was my point which really cannot be denied.
“And I am not saying this to irritate or belittle or rub it in”
I don’t feel belittled by your personality defects. Although your persistence in expressing them do tend to rub them in, I guess.
Also: “[my house] is near 05/06 levels right now – and, given the deflationary period we are in right now, the price level is higher in “real dollars””
If you think we’ve had enough deflation that a 2010 USD is worth more than a 2005 USD, you are using some “interesting” calculations.
Your house hasn’t dropped in value at all since the housing bubble popped? Those must be some amazing psychological factors.
“The ONLY reason the house I live in is actually at 05/06 prices is because of the psychological factors”
“I am assuming that annony (1) knows the current market value of the unit quite accurately, and (2) is paying market rent for the place.”
Yes, I’d say that $425k is a pretty good estimate of its current value (i.e., what someone would likely pay for it). At $2,500/mo, I feel like we’re getting a pretty good deal (I think the owner’s been losing about $800/mo, leaving aside any tax considerations). In 2008, we looked at several places in the $2200-$2500/mo range, and this place was much, much nicer than anything else (despite the fact that it has neither parking nor w/d).
“At $2,500/mo, I feel like we’re getting a pretty good deal ”
You’re definitely getting a good deal relative to probable sale price, as demonstrated. If your landlord owned it w/o a mortgage, he’d be getting sub-3.5% on his MtM investment, which isn’t too bad right now, but isn’t really sufficient compensation for the risk.
Whether it’s a good deal compared to other similar properties available for rent is a complete unknown to the rest of us.
“Your house hasn’t dropped in value at all since the housing bubble popped? Those must be some amazing psychological factors.”
What is really interesting is that we are seeing a significant rebound in prices and interest in Hinsdale/Oak Brook. I think that it may be because people who ARE buying are looking at “safer” bets. In the early and mid 2000s there were MANY choices and most people felt they could buy anywhere and be safe (financially) – ie, why spend 1.5million on an OK house in oak brook when you could buy a mansion for the same amount in st. charles. Now, I think people are extremely cautious about their money and are only buying/looking in these areas.
I wonder if the same phenomenon is happening (or will start happending) w/ established buildings in Chicago.
I wonder if the same phenomenon is happening (or will start happending) w/ established buildings in Chicago.
Yes it will. Buyers will be drawn to strong associations with predictability and a mix of owners with different levels of equity. Those buildings associations should promote the percentage of units with little or no mortgages! The stable older buildings that are well managed and extremely well maintained will be considered “safer harbors” for predicting future values. They will experience stronger growth while buildings like The Sterling or River City will develop bad reputations that will haunt them for DECADES!
“If you find a house/condo w/ good bones that is a good deal in a GREAT area/building now ABSOLUTELY POSITIVELY is the time to buy. The prices in these GREAT, long standing desireable areas will NOT GO DOWN – and if you miss this chance, you may NEVER have the opportunity to buy in these buildings/area again.”
You don’t need to be an intelligent and very experienced RE investor to know this ‘RE 101’ fact of life information is and has always been true. Regardless of the economic atmosphere, if you have the $$$ and desire to buy in one of the exclusive areas/buildings in ANY city NOW is the best time to buy…or be priced out forever.
These exclusive and much sought after places have never been touched by any downturn nor will they ever be…that is just the nature of the game. There is a limited supply of these places and that is what keeps them exclusive regardless of how many or how few millionaires there are looking to buy.
In response to your prediction of the new era of RE flippers who will be offering their own financing…stay away from this type of deal as they are the exact same companies that were wiped out during the recent bust. The goal of these greedy, no worries about anything or anyone other than their own fortunes is plain to see. They provide their own financing and keep their fingers crossed that those uneducated in RE matters people lose their jobs so they can take back their units and resell them to the next bunch of ill informed people.
I just hope you are not actually going to be doing these types of transactions….but based on your past posts where you feign sympathy for those in a terrible financial situation, I am assuming you will be the ring leader of such an organization. Right?
“I am assuming you will be the ring leader of such an organization. Right?”
I would never cheat anyone out of anything – in fact, I would be the first person to give the shirt of his back for someone (and I have many times). I am a terrible landlord because I let my tenants go without paying rent, reduce their rent, and provide lots of extras (furniture, payment of utilities) when they fall on hard times. I am sure many of my renters take advantage of me, but I like to think that I am helping them out. My comments on those investor conglomerates were made because that IS what is going on right now. I don’t know if I will join – I can assure you, though, that it would be a win-win situation if I did.
“You don’t need to be an intelligent and very experienced RE investor to know this ‘RE 101? fact of life information is and has always been true. Regardless of the economic atmosphere, if you have the $$$ and desire to buy in one of the exclusive areas/buildings in ANY city NOW is the best time to buy…or be priced out forever.
These exclusive and much sought after places have never been touched by any downturn nor will they ever be…that is just the nature of the game.”
god almighty f*ckin A. you realize how asinine this statement is dont you? written at 7am so I doubt your drunk. there are many many examples of exclusive areas being touched by downturns, at least here in chicagoland. I suspect it has happened everywhere.
“You don’t need to be an intelligent and very experienced RE investor to know this ‘RE 101? fact of life information is and has always been true. Regardless of the economic atmosphere, if you have the $$$ and desire to buy in one of the exclusive areas/ buildings in ANY city NOW is the best time to buy…or be priced out forever.
These exclusive and much sought after places have never been touched by any downturn nor will they ever be…that is just the nature of the game.”
god almighty f*ckin A. you realize how asinine this statement is dont you? written at 7am so I doubt your drunk. there are many many examples of exclusive areas being touched by downturns, at least here in chicagoland. I suspect it has happened everywhere.
“You don’t need to be an intelligent and very experienced RE investor to know this ‘RE 101? fact of life information is and has always been true. Regardless of the economic atmosphere, if you have the $$$ and desire to buy in one of the exclusive areas/ buildings in ANY city NOW is the best time to buy…or be priced out forever.
These exclusive and much sought after places have never been touched by any downturn nor will they ever be…that is just the nature of the game.”
god almighty fckin A. you realize how asinine this statement is dont you? written at 7am so I doubt your drunk. there are many many examples of exclusive areas being touched by downturns, at least here in chicagoland. I suspect it has happened everywhere.
westloop:”You don’t need to be an intelligent and very experienced RE investor to know this ‘RE 101? fact of life information is and has always been true. Regardless of the economic atmosphere, if you have the $$$ and desire to buy in one of the exclusive areas/ buildings in ANY city NOW is the best time to buy…or be priced out forever.
These exclusive and much sought after places have never been touched by any downturn nor will they ever be…that is just the nature of the game.”
god almighty fckin A. you realize how asinine this statement is dont you? written at 7am so I doubt your drunk. there are many many examples of exclusive areas being touched by downturns, at least here in chicagoland. I suspect it has happened everywhere.
wow, apologies for the quadruple post. might be a cc record.
Feel strongly about that one, CH?
JMM – will you ream out clio for saying “buy now or be priced out forever?”
for a brief moment in time, yes